When it comes to buying a house, few people would not agree that bigger is better.However, logically the bigger the house you buy the more money you will have to spend, right?This is not always the case.There are ways to plan ahead so that you can buy a bigger house on the same income and afford it.
Get a better interest rate
The one biggest determinate in how good your interest rate will be is your credit score.Poor credit may get you into a house but at a higher interest rate.Although a percentage point or two may not seem like a lot initially, over time you can end up paying hundred of thousands of dollars in interest alone.Anything that you can do to make your interest rate as low as possible is not only going to get you a more competitive rate but it will also make it possible for you to get into a bigger house on your same income.The key is to mind your credit.To lenders, your credit score is a reflection of your responsibility and ability to pay for the things that you owe money on.The less responsible you are with your creditors the lower your score will be.Below are a few suggestions on how you can improve your credit dramatically.
– Make your payments on time – It is as simple as that.Lenders want to know that you have a history of paying back the money that you owe.Obviously, if you do not have a history of making regular payments, a bank will either refuse to lend you the money for a house or they will charge you a higher interest rate in order to compensate for the fact that lending you money is more risky.
– Make sure your available credit is high – You need to show that you are a responsible user of credit.To do this you need to make sure that your lines of credit never exceed %30 of your available limit.There ratio of available credit to unavailable credit weighs heavily on your credit score.This shows lenders that you know how to live within your means.
– History and number of accounts – the longer you have had opened accounts and the more opened, well managed accounts that you have had in that time, the better your credit score will be.A common misunderstanding is that having multiple credit cards is bad for your credit.This is only true if you are irresponsible with those cards and cannot pay off the balance on a regular basis.Having multiple credit cards that are used but not abused will actually greatly improve your credit score.
Location, location, location
The more desirable the location of the house, the more it is going to cost.If you are looking to buy a bigger house in the same income you may need to sacrifice prime locations in order to do so.Different parts of the country are more and less expensive to live in.Likewise, houses by the ocean, major cities, public parks, etc. will all carry a bigger price tag.
Timing
The best time to buy a house is going to be when the sellers are most desperate.The peak season for buying a house is during the end of the winter months.Sellers who put their house on the market too late in the season will find themselves desperate to sell before the holidays.Prices are reduces and sellers are more likely to accept reduces offers when they have had their home on the market for a long time.
Don’t get emotionally attached
You have to go into your house hunt with the mentality that you will be willing to walk away from a potential deal.When you allow your emotions to dictate your financial decisions, you can end up spending more than your income allows.Take your time, don’t be rushed and be very passive.Let the sellers bend backwards to please you.You may be surprised that you will run into a lot of deals when your seller is worried about loosing you to another seller.